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In Re Applications of TIMES HERALD PRINTING CO. (ASSIGNOR) and

TIMES HERALD PRINTING CO. OF TEXAS (ASSIGNEE)

For Assignment of the License of Station KRLD-TV, Dallas, Tex.; TIMES HERALD PRINTING CO. (ASSIGNOR) and

KRLD CORP. (ASSIGNEE) For Assignment of the Licenses of Stations KRLD AM and KRLD-FM, Dallas, Tex.

 

File No. BALCT-396; File Nos. BAL-6856, BALH-1316

 

FEDERAL COMMUNICATIONS COMMISSION

 

25 F.C.C.2d 984

 

RELEASE-NUMBER: FCC 70-518

 

October 2, 1970 Released; Adopted May 15, 1970

 


 

JUDGES:

BY THE COMMISSION: CHAIRMAN BURCH CONCURRING IN THE RESULT; COMMISSIONER BARTLEY NOT PARTICIPATING; COMMISSIONER COX CONCURRING AND ISSUING A STATEMENT; COMMISSIONER JOHNSON DISSENTING AND ISSUING A STATEMENT.

 


 

OPINION:

[*984] 1. We have before us for consideration: (1) Application for the voluntary assignment of license of Station KRLD-TV, Dallas, Texas from the Times Herald Printing Company to the Times Herald Printing Company of Texas (BAPCT-396); and (2) Applications for the voluntary assignment of licenses of Stations KRLD AM and KRLD-FM from the Times Herald Printing Company to KRLD Corporation (BAL-6856) and (BALH-1316).

2. We have fully considered all aspects of the above applications and consider that a grant of each would serve the public interest, convenience and necessity. Our reasons for reaching this result follow.

3. The Times Herald Printing Company, publisher of the Dallas Times Herald, a daily newspaper in Dallas, Texas, has been the licensee of KRLD-TV, KRLD AM and KRLD-FM for a number of years. n1 In the assignment applications above mentioned, it advised the Commission as follows:

n1 It was licensed to operate KRLD-TV in 1949, KRLD AM in 1926, and KRLD-FM in 1948.

"... From its inception, The Times Herald has been a relatively closely-held private company. All of its founders, and virtually all of its current stockholders, have been residents of the State of Texas, and a preponderance of same have resided, and reside, within the Dallas-Fort Worth area.

" [*985] Over the years, many of The Times Herald's founders and their successors have passed away. To maintain the esprit de corps that has been characteristic of the Times Herald, provisions in the wills of deceased stockholders have allocated stock for key personnel. Since 1965, voting stock has been made available by the company to officers and employees of the company to encourage their continued employment and loyalty. "The heirs of the deceased founders of the Times Herald and the many employees would like to establish a market value for their holdings. At the same time those in management and at lower levels, in general, have no present desire to sell their stock and/or to leave the Times Herald.

"In these circumstances, the assignors have two methods of achieving their objective; they may file for a public stock offering for the licensee, or they may merge with an existing public company.

"During their contemplations of the above, Times Herald personnel were approached by representatives of Times Mirror [publisher of the Los Angeles Times]. The latter made an offer that will enable assignor to (1) receive valuable stock in exchange for Times Herald stock, (2) permit management and other personnel to remain in their positions with the Times Herald, (3) continue to bring the same, superior quality of newspaper and broadcast service to their readers and viewers, (4) provide such service with confidence that editorial and day to day decisions would not be dictated from Los Angeles, and (5) continue to operate the newspaper and broadcast service independently of one another -- consistent with practices of the past."

4. With this background, we proceed to the transaction. There is no need to mention all of the intricate details of the proposal. Suffice it to say, that the KRLD broadcast properties, heretofore under common ownership, will now be under diverse ownership. A wholly owned subsidiary of the Times Mirror Company, the Times Herald Printing Company of Texas, will be the licensee of Station KRLD-TV and own the Times Herald newspaper. In exchange, the old Times Herald Company stockholders will receive 1,800,000 shares of convertible preferred Times Mirror stock. Each share so received will be convertible into 1.11 shares of Times Mirror common stock. Additionally, a new company, KRLD Corporation, totally unrelated to the Times Mirror Company, will assume the licenses of Stations KRLD AM and KRLD-FM, subject to our new multiple ownership rules. The consideration for this transaction is $6,750,000 which is to be received by the Times Mirror Company.

5. The Times Mirror Company, a publicly traded corporation is controlled by the Chandler family of Los Angeles. n2

n2 Four banks, as trustees, hold in excess of 1% but less than 3%, of Times Mirror voting stock. These same institutions also hold sufficient stock interest, as trustees, in other publicly traded broadcast companies to affect our multiple ownership rules. Banks, acting as trustees for the benefit of others, holding sufficient stock in publicly traded broadcast licenses to trigger our multiple ownership rules, is a broadcast industry wide question which we have before us in another context. (See the Petition of the American Bankers Association, In the Matter of Amendment of Sections 73.35, 73.240 and 73.636 of the Commission's Rules relating to multiple ownership of AM, FM and television stations, Docket No. RM 1460.) Pending the resolution of this question, we have made grants where this question is a factor, subject to whatever final action the Commission may take as a result of the above petition. (See our grants in WALA-TV, Mobile, Alabama and WIFI-FM, Philadelphia, Pa.) We will condition the KRLD-TV grant in the same fashion.

6. Both the Times Herald Printing Company of Texas and KRLD Corporation are financially qualified. The basis of the KRLD-TV transaction is 1,800,000 shares of Times Mirror convertible preferred stock. Thus no cash is required. KRLD-TV is of course very sound financially and additionally, the Times Mirror consolidated balance sheet before the Commission indicates that that company is well qualified financially.

[*986] 7. KRLD Corporation, which is acquiring Stations KRLD AM and FM for $6,750,000, subject to our new multiple ownership rules, is also financially qualified. Its Officers, Directors and Stockholder are:

 

 

 

 

Percent

Philip R. Jonsson

President and treasurer

Director

28.33

Carl Jacob Thomsen

Senior Vice president

do

7.5

Robert W. Olsen

do

do

7.5

Mrs. Margaret Charlton

Secretary

do

28.33

Kenneth A. Jonsson

Vice president

do

28.33

Sol Goodell

Assistant secretary

do

 

 

KRLD Corporation relies on a loan from the Republic National Bank in the sum of $3,000,000, sale of stock to its shareholders and a $3,000,000 loan from J. Erik Jonsson, Mayor of Dallas.

8. The question has been raised in a letter filed with the Commission, by the attorney for a complainant, Slenderette, Incorporated, whose principals are unknown to the Commission, that a loan from Mayor Jonsson to KRLD Corporation would violate our cross interest policy. The alleged basis for this charge is that the city of Dallas is the licensee of Stations WRR and WRR-FM, Dallas, Texas, that Erik Jonsson is the Mayor of Dallas, and that his children are principals in KRLD Corporation. The facts of this matter were set out in full in the KRLD applications above referred to. It included a statement from Mayor Jonsson that he did not intend to run for reelection after the expiration of his term in May of 1971, and that he would abstain from all Dallas City Counsel deliberations on matters affecting the City Radio Commission and Stations WRR and WRR-FM in order "to avoid any possible appearance of conflict of interest arising from [his] proposed position as a creditor of KRLD Corporation." He further stated that he had "no intention of becoming a stockholder, officer or director of KRLD Corporation, or of otherwise participating in its management in any manner." In view of these facts, we are of the view that the Commission's cross interest policy is not applicable to the instant proposal.

9. Section IV-A of our application form was designed to acquaint the applicant with the needs of the area it intends to serve and to propose programs to meet these needs. Both the Times Herald Printing Company of Texas and KRLD Corporation have fully complied with that section of our application.

10. KRLD-TV undertakes to serve the Dallas-Fort Worth area and 41 counties in the surrounding north central region of Texas. Senior executives of the applicants engaged in personal interviews with a total of 147 community leaders in Dallas and Fort Worth and an additional 45 community leaders in surrounding counties. The persons interviewed represented a cross section of leaders in the area served. These efforts were supplemented by a survey taken by Frank Magid, a private company; also, station personnel consulted with a number of leaders of community organizations.

11. KRLD AM and FM undertakes to serve the populations living in Dallas, Collin, Denton, Ellis, Kaufman, Johnson and Tarrant [*987] Counties and their principal subdivisions. The principals of KRLD Corporation and top echelon employees interviewed over 100 community leaders representing a cross section of the area. This applicant also engaged the services of Marketing and Research Counselors Inc. of Dallas who completed a total of 200 interviews. Additionally, the assignee also relied somewhat on the views of station personnel who are involved in civic welfare, religious and other activities of the community.

12. Many of the community needs discovered by the KRLD-TV assignee and the KRLD AM and FM assignee were similar. For instance improvement of education, improvement of race relations and minority group problems, the problem of crime and rehabilitation of criminals etc., are community problems discovered by both assignees. Other problems were also discovered.

13. Both applicants listed programs designed to meet these community needs. KRLD-TV proposes: (1) "Point of View". The assignee proposes to utilize this weekly 30 minute locally originated program to present discussions, forums, panels, and speeches concerning all significant sides of specific community needs; (2) "Cross Roads in the Seventies" is a weekly 30 minute locally originated program. The assignee will treat other community needs on this program.

14. "KRLD-TV Reports". This is a 30 minute documentary program broadcast every fourth week. A variety of issues will be explored on this program. Additionally KRLD-TV proposes to increase news coverage of the North Texas Council of Governments, a number of spot announcements to meet certain needs such as financial assistance for culture institutions, and an editorial four times each week. Broken down into categories, KRLD-TV programming will be:

 

 

Percent

News

10.5

Public affairs

2.1

All other programs

10.5

 

15. The KRLD AM and FM assignee also proposed specific programs. Aside from news, KRLD AM will have "Comment Program" covering about 2 hours, which will be broadcast Monday through Friday. It will also broadcast editorials five times weekly and will carry such Columbia Broadcasting System programs as "Face the Nation", "Capital Cloak Room" and "Washington Week" as well as sports, local government and fishing reports, and religious, instructional and public affairs programs. KRLD programming by categories will be:

 

 

Percent

News

22.79

Public affairs

6.15

All other programs

17.83

 

16. KRLD-FM will duplicate KRLD AM about 45.7% of the time. It proposes a new program, tentatively entitled "Free Association" which will be scheduled for at least 30 minutes per week. It is designed [*988] as a vehicle for students to discuss their problems. KRLD-FM programming by categories will be:

 

 

Percent

News

11.43

Public affairs

1.61

All other programs

5.12

 

17. In reviewing the applications before us, we, of course, noted that the Times Mirror Company is a publicly traded company with many media interests. For example, it publishes the Los Angeles Times, said to be the second largest daily newspaper in the United States; it has an agreement to acquire control of Newsday, Inc., which is an afternoon newspaper published in Nassau County, Long Island, New York; it has ownership interests in magazines such as Popular Science and Outdoor Life and has CATV franchises in operation both in California and New York as well as other interests. It has no media interests in Texas, and has no other TV interests either in Texas or elsewhere. The question that we have to decide is whether a grant of this application would cause an undue concentration of control of mass media in violation of our multiple ownership rules. We think it will not.

18. In the first place, the transaction proposed by these applications would actually reduce media concentration in Dallas-Fort Worth. This is so because prior to these applications, the KRLD broadcast properties, KRLD-TV, KRLD AM and FM, all came under the aegis of the Times Herald Printing Company. Our grant of these applications will separate KRLD-TV from KRLD AM and KRLD-FM and eventually separate KRLD AM from KRLD-FM. In this circumstance, instead of this grant causing an undue concentration of control of mass media, it is serving to reduce concentration of control.

19. In the second place, the Dallas-Fort Worth area is served by a plethora of media, and it would be virtually impossible to unduly influence the American people by common ownership of the Dallas Times Herald and KRLD-TV, in the context of current ownerships in Dallas-Fort Worth.

20. The Dallas-Fort Worth area is served by four major newspapers: the Dallas Morning News, the Dallas Times Herald, the Fort Worth Times and the Fort Worth Star Telegram. All of these newspapers have large circulations. The Dallas Fort Worth market is served by a total of four commercial VHF stations and two commercial UHF stations. The Times Herald Printing Company, publisher of the Dallas Times Herald, is of course the licensee of Station KRLD-TV, the subject station. The A. H. Belo Corporation, is the publisher of the other Dallas newspaper and is the licensee of Station WFAA-TV as well as WFAA AM and FM in Dallas. It is also the licensee of Station KFDM-TV, Beaumont8 Texas.

21. The licensee of Station KTVT, Fort Worth is the Oklahoma Publishing Company, publisher of the Daily Oklahoman, the Oklahoman City Times and the Farmer-Stockman. Carter Publications, Inc., publisher of the Fort Worth Star Telegram is the licensee of Station WBAP-TV, as well as an AM and FM station in Fort Worth.

22. Additionally, Dallas has five full time and three daytime AM stations and ten FM stations. Nine full time and two daytime AM stations [*989] located in Forth Worth, place a 2 mv/m signal over all or part of Dallas, and eight FM stations assigned to Fort Worth place a 60 dbu signal over the Dallas City limit. Beaumont Television Corp., 17 FCC 2d 580 (1969). In the Dallas-Fort Worth market, ownership by the Times Mirror of station KRLD-TV and the Dallas Times Herald will not cause an undue concentration of control.

23. It is true that the Commission has issued a further notice of proposed rule making which aims at reducing common ownership of daily newspaper and broadcast stations within the same market. It would require divestiture within five years to reduce holdings in any market to one or more daily newspapers, or one television broadcast station, or one AM-FM combination. Since the KRLD-TV assignee is also acquiring the Times Herald newspaper, it is clear that at some future date, it, along with many other licensees, may be faced with a forced divestiture. The Commission in its proposed rule making on this subject, made it clear that it would have no interim policy in connection with acquisitions governed by this proposed rule. Since there is no interim policy, acquisition now of both KRLD-TV and the Dallas Times Herald is consistent with Commission rules and policy. We simply do not consider it wise nor equitable to examine this acquisition on the basis of a proposed rule that may never be adopted. The proposed rule, if finally adopted, will be applied across the board to this applicant as well as others similarly situated.

24. In reaching the conclusion that acquisition by the Daily Mirror of KRLD-TV and the Dallas Times Herald will not cause an undue concentration of control of local mass media, we also conclude that it will not cause an undue concentration of regional or national concentration of control of mass media.

25. The Times Mirror has no media interests in Texas nor in any state that is contiguous to Texas. In Los Angeles, the Times Mirror faces competition not only from the Los Angeles Herald Examiner but also from a number of suburban dailies, and from the Christian Science Monitor and also from the National Observer, which have sizeable circulations in California. Serving Los Angeles are also seven VHF and four UHF television stations and some 34 AM and FM stations. We find no regional concentration of control of mass media, nor do we find that the Times Mirror media interests cause an undue national concentration of control of mass media.

26. Finally, we have previously mentioned that the grant of KRLD AM and FM to KRLD Corporation will be made subject to our new multiple ownership rules. Slenderette Incorporated, stated before as being a complainant whose principals were unidentified, requested the Commission to reconsider its ruling contained in the staff's letter of April 6, 1970 to the effect that:

"... the staff will continue to process these applications [KRLD AM and FM] and if the Commission otherwise finds that the assignees are fully qualified and that grants will serve the public interest, the grant of the KRLD AM and FM application will be conditioned as you suggest, that the assignee promptly dispose of one of these stations."

27. This relief which was granted by the Commission itself and merely incorporated in the staff letter above referred to, had the following [*990] background. On March 27, 1968, the Commission adopted a notice of proposed rule making which looked to amend its multiple ownership rules to prohibit the grant of any application for a broadcast license, if after the grant the licensee would own, operate or control two or more full time broadcast stations in whatever service in the same market. Between the time of the notice above referred to and March 25, 1970, the date that the new rule was adopted, a number of assignment and/or transfer applications involving multiple broadcast stations in the same market were filed and granted by the Commission on condition that they would be subject to the outcome of the pending rule making.

28. The rationale of these conditional grants was that since they were subject to the outcome of the pending rule making, they would not alter any degree of concentration of control of mass media of communication in the markets involved pending the rule making and at the same time would serve the business needs of the parties to the applications.

29. The KRLD AM and FM applications were, of course, filed during the pendency of the Commission's rule making. In accordance with the practice concerning conditional grants that had been established by the Commission in those other assignment applications previously mentioned, KRLD Corporation advised the Commission that it would accept a grant of KRLD and KRLD-FM subject to the outcome of the rule making.

30. Thereafter, on March 25, 1970, while the subject applications were pending, the Commission adopted its new rules with respect to multiple ownership of broadcast stations in the same market. These rules generally bar the acquisition of more than one broadcast station in the same market. On March 31, 1970, the parties to the KRLD applications wrote the Commission and requested that the new rules "be interpreted and/or waived to the extent necessary to permit further processing and action of the applications."

31. In support of its request, the parties pointed out that the agreements, underlying the applications were mutually contingent; that the basic agreement was terminable on June 30, 1970 unless a Commission Order consenting to the assignment of the TV and radio license of KRLD AM and FM had become final by that date; that as of March 31, 1970, it was highly unlikely that a separate buyer could be found for either KRLD AM or KRLD-FM and an application filed to meet the expiration date above referred to, and finally, KRLD Corporation remained willing to accept a grant of both KRLD AM and KRLD-FM on condition that it promptly dispose of either one or the other.

32. In the Commission's letter of April 6, which granted the relief sought, the staff referred to May 30, 1970 as the expiration date instead of stating that the KRLD contracts were terminable by June 30, 1970, unless a Commission grant of the application was final by that date. Since under Section 405 of the Communications Act, petitions for reconsideration of Commission action may be filed within 30 days after Commission grants, final action by June 30, 1970 is the equivalent of saying that the applications had a May 30, 1970 deadline for Commission [*991] action. To the extent that the letter of April 23, 1970, filed in behalf of Slenderette, Incorporated relies on this alleged error in the termination date, it is clearly misplaced.

33. The complainant also charged that the parties "arbitrarily set the date the agreement is voidable" in order to later use the expiration date as a basis for its requested relief. There is no evidence at all to support this contention. Simply put, the Commission ruling contained in the April 6 letter was based on the inherent unfairness of a contrary decision, and that the public interest, convenience and necessity would best be served by grant of the relief in question.

34. The Commission has fully considered these applications and concludes: (1) that the assignees in the above entitled applications are fully qualified; (2) that grants of these applications on the conditions hereinafter specified will serve the public interest convenience and necessity and; (3) that the informal complaint of Slenderette Incorporated, having no merit, be dismissed.

35. IT IS THEREFORE ORDERED That: (1) the application for voluntary assignment of license of Station KRLD-TV, Dallas, Texas from the Times Herald Printing Company to the Times Herald Printing Company of Texas IS GRANTED. Because of the bank trustee matter contained in footnote 2 supra, this grant is made subject to whatever final action the Commission may take in Docket No. RM 1460 on the Bankers Petition, In the Matter of Amendment of Section 73.35, 73.240 and 73.636 of the Commission's multiple ownership rules; (2) the application for the voluntary assignment of licenses of Stations KRLD AM and KRLD-FM from the Times Herald Printing Company to KRLD Corporation IS GRANTED subject to our new multiple ownership rules revising Sections 73.35 and 73.240 of our rules, and the complaint of Slenderette, Incorporated IS DISMISSED.

 

FEDERAL COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.

 


 

CONCURBY: COX

 

CONCUR:

CONCURRING STATEMENT OF COMMISSIONER KENNETH A. COX

I concur in the result reached here, but do not agree with what is said in Paragraph 19 and the last sentence of Paragraph 22. I agree that this transaction will produce somewhat greater diversity than has heretofore existed in Dallas, since three different parties will ultimately control the four media of communications previously held by Times Herald Printing Company, the assignor herein. However, I am inclined to believe -- as indicated by my vote in favor of the Further Notice of Proposed Rulemaking in Docket No. 18110, 22 FCC 2d 339 -- that joint ownership of a newspaper and a television station in the same market is not in the public interest. As is indicated in the majority opinion, Times Mirror acquires these properties in Dallas subject to the outcome of that proceeding. If the Commission adopts the policies proposed -- as I now believe it ultimately should -- then Times Mirror will have to divest itself either of the television station or the newspaper.

But we did not impose the policies proposed in Docket 18110 on an interim basis. Thus those who now own combinations of media of the [*992] kind we propose to break up may continue to hold them -- and to obtain renewals of license for the broadcast properties, in the absence of other problems -- while the Commission considers the matter. Since this proceeding may take some time, others may acquire interests inconsistent with the proposal, so long as it is clearly understood that they will be required to comply with any rules eventually adopted.

I think this is the orderly way to proceed. In our January 1970 policy statement on comparative renewal proceedings we announced that we did not believe it would be wise to restructure ownership patterns on an ad hoc basis in renewal hearings, but that this result, if it is to be reached, should come about through general rulemaking. I think the same is true of a transfer application which reduces, but does not eliminate, concentration in a local market.

On this basis, I concur in the action here.

 


 

DISSENTBY: JOHNSON

 

DISSENT:

DISSENTING OPINION OF COMMISSIONER NICHOLAS JOHNSON

In 1941, almost 30 years ago, this Commission initiated an inquiry to determine what "policy or rules" it should adopt concerning the acquisition of broadcast stations by newspapers. n1 Three years later, in 1944, the Commission terminated its inquiry, deciding instead to treat problems of newspaper-broadcast cross-ownership on an "individual," case-by-case basis. n2 In so doing the Commission promised that in each case it would "inquire into and in its decisions give expression to 'public interest' considerations." n3 There is little doubt that this Commission has forgotten or broken that promise hundreds of times during the past 26 years. In almost three decades, this Commission has accomplished virtually nothing toward formulating "public interest" standards for newspaper-broadcast transfer applications. The paucity of reasoning in the majority's decision only underscores this depressing fact.

n1 High Frequency Broadcast Stations (FM), 6 Fed. Reg. 1580 [Order No. 79] (Mar. 22, 1941); Hearing on Joint Association of Newspapers and Broadcast Stations, 6 Fed. Reg. 3302 [Order No. 79-A] (July 8, 1941).

n2 Newspaper Ownership of Radio Stations, Notice of Dismissal of Proceedings, 9 Fed. Reg. 702 (Jan. 18, 1944).

n3 Id. at 703.

By anyone's standards, the two transfers before the Commission are significant. In the first, the Times Mirror Company, publisher of the Los Angeles Times, has acquired KRLD-TV and the Dallas Times Herald -- the leading television station and the leading daily newspaper in the nation's twelfth largest market -- in a transfer which violates all the justifications for our Further Notice of Proposed Rule Making in Docket No. 18110, see Multiple Ownership of Standard, FM and TV Broadcast Stations, 22 F.C.C. 2d 339 (1970), which proposes to bar newspaper-television cross-ownership. In the second, KRLD-AM-FM is being transferred in a package which violates our recently adopted one-to-a-market rules, see Multiple Ownership of Standard, FM, and TV Broadcast Stations, 22 F.C.C. 2d 306 (Docket No. 18110) (1970). Before examining the purported "rationale" the majority's decision, therefore, it will be useful to describe clearly the Dallas-Ft. Worth market and the various companies and acquisitions involved.

 

[*993] I. The Factual Setting

 

The Times Mirror Company is seeking to acquire KRLD-TV and the Dallas Times Herald in Dallas, Texas, as well as the daily newspaper, Newsday, in Long Island, New York. The value of the Times Mirror holdings will be increased by $82 million -- $19 million for Newsday and approximately $63 million for KRLD-TV and the Dallas Times Herald.

All the components of this acquisition are extremely profitable. The Times Mirror Company's revenues in 1968 were $362.5 million. The Dallas Times Herald complex grossed $33.8 million. (KRLD-TV alone garnered 30% of the Dallas television audience, according to recent ARB ratings.) Newsday itself has a daily circulation of 438,345 -- which will be added to the Los Angeles Times circulation of 975,491 daily and 1,308,711 on Sundays.

Even prior to its new acquisitions the Times Mirror Company was a substantial enterprise. The Los Angeles Times itself is the second largest newspaper in the country -- and certainly the dominant newspaper in our largest State's largest city, a city with little or no meaningful newspaper competition. Much of its national media influence comes from its membership in the nationally distributed Washington Post-Los Angeles Times feature syndicate -- although the paper is, in its own right, regarded by many insiders of the journalism fraternity as one of (if not the) finest newspapers in the United States. The Times Mirror Company also owns five operating CATV systems in California, and five in Long Island, the home of Newsday. All these CATV systems were acquired during the past 18 months -- the Long Island systems having been purchased in March 1970. Total CATV subscribers are now over 20,000. The Times Mirror Company also has CATV franchises for ten counties or communities in California and Florida. A subsidiary, the Times Mirror Press, publishes the major telephone company directories in nine large cities in the Western United States. Times Mirror is a book publisher, including such well-known lines as Signet, Mentor, Matthew Bender, and the New America Library. It publishes the Orange County Daily Pilot, and its Popular Science Monthly and Outdoor Life have a combined circulation of 3.3 million monthly. It publishes maps, charts, and educational aids. The Times Mirror also holds significant interests in oil, cattle, farming, paper mills, mobile homes, timber, newsprint, and paper products.

The Times Mirror Company is described more fully in United States v. Times Mirror Company, 274 F. Supp. 606 (S.D. Cal.), aff'd per curiam, 390 U.S. 712 reh. denied, 381 U.S. 971 (1967), ordering the Times Mirror Company to divest certain newspaper acquisitions it had made in the Los Angeles area.

The Dallas-Ft. Worth television market is the nation's twelfth largest. It has four commercial VHF stations, one educational VHF, two commercial UHF stations and one educational UHF. In addition, the two cities of Dallas and Ft. Worth have between them 14 full-time AM stations, five daytime AM's, and 18 FM's. The Dallas-Ft. Worth area also has four daily newspapers: the Dallas Times Herald (217,846 daily, 259,357 Sunday); the Dallas Morning News (203,463 daily, [*994] 232,792 Sunday); the Fort Worth Press (42,892 daily, 47,982 Sunday); and the Fort Worth Star Telegram (214,963 daily, 183,846 Sunday). n4

n4 Circulation figures for the Dallas Times Herald are taken from the transfer applications of the parties in this case. Other circulation figures come from the Audit Bureau of Circulations (ABC), and include Dallas County plus 20 surrounding counties.

The Dallas-Ft. Worth market is unique, however, for its high degree of newspaper-broadcast cross-ownership. Each of the market's four commercial VHF television stations, for example, is owned by a newspaper publisher, and each of the three network affiliated VHF's are owned by local newspapers -- leaving not one independently owned commercial VHF station in the entire market. I doubt whether there is one other major market in the country with such a high degree of newspaper-broadcast cross-ownership. In the Dallas-Ft. Worth market, the breakdown is as follows:

(1) KRLD-AM-FM-TV (Channel 4, CBS), licensed to the Times Herald Company, publisher of the Dallas Times Herald;

(2) WFAA-AM-FM-TV (Channel 8, ABC), licensed to A. H. Bello Corp., publisher of the Dallas Morning News and licensee of KDFM-TV, Beaumont, Texas;

(3) KTVT (Channel 11, Independent), licensed to the Oklahoma Publishing Company, publisher of the Daily Oklahoman, the Oklahoma City Times and the Farmer Stockman, and licensee of KHTV, Houston, and WKY-AM-FM, Oklahoma City [see generally, Renewal of Standard Broadcast and Television Licenses (An Oklahoma Case Study), 14 F.C.C. 2d 1 (1968) (Commissioners Cox and Johnson dissenting)].

(4) WBAP-AM-FM-TV (Channel 5, NBC), licensed to Carter Publications, Inc., publisher of the Fort Worth Star Telegram.

 

KRLD-TV and the Dallas Times Herald are the two most successful media outlets in the Dallas-Ft. Worth market. According to ARB, KRLD-TV is ranked first in the market, with an average share of 30% of the sets in use. The Dallas Times Herald has the largest circulation of any newspaper in the area. There seems little question that the TV and the newspaper could be operated independently of each other without any economic hardship. The question we must address, therefore, is why the "public interest" is served by permitting two of the most powerful media voices in the Dallas-Ft. Worth market to continue in the hands of a single owner.

 

II. FCC Policy on Newspaper-Broadcast Cross-Ownership

 

A. Transfers and Media Monopolies: The Legislative History of Section 310(b)

The transfers of KRLD-TV and KRLD-AM-FM must be judged by the standards imposed upon this Commission by Congress in Section 310(b) of the 1934 Communications Act. Section 310(b) provides in pertinent part:

No construction permit or station license... shall be transferred... to any person except upon application to the Commission and upon finding by the [*995] Commission that the public interest, convenience, and necessity will be served thereby... [Emphasis supplied.]

Although Section 310(b) contains no express language regarding concentration of ownership control, its legislative history indicates clearly that Congress intended Section 310(b) of the 1934 Act and its predecessor, Section 12 of the Radio Act of 1927, to prevent the growth of media monopolies contrary to the public interest.

Because the Radio Act of 1912 n5 contained no restrictions on the assignment or transfer of licenses, n6 many Congressmen feared that private entities would accumulate property rights in licenses worth millions of dollars. n7 On April 20, 1922, therefore, the first bills were introduced into the Senate n8 and House n9 requiring the Secretary of Commerce to authorize all station license transfers before they were consummated. n10 The House Bill, introduced by Mr. White of Maine, instructed the Secretary of Commerce not to grant radio licenses to any person or corporation which in his judgment was monopolizing or seeking to monopolize radio communications, and expressly prohibited transfers in violation of the Act. n11 Further bills were introduced in both Houses of Congress from 1922 through 1926, culminating in S. 1, 69th Cong., 1st Sess. (1925), introduced by Senator Howell, and S. 1754, 69th Cong., 1st Sess. (1925), introduced by Senator Dill. n12

n5 37 Stat. 302 (1912). See generally, Davis, The Law of Radio Communication (1924).

n6 See 29 Ops. Atty. Gen. 579 (1912).

n7 See, e.g., H. Rep. 464, which accompanied H.R. 9971, and S. Rep. No. 772, which accompanied H.R. 9971 in the Senate, 69th Cong., 1st Sess. (1926).

n8 S. 3694, 67th Cong., 2nd Sess. (1922).

n9 H.R. 11964, 67th Cong., 2nd Sess. (1922).

n10 S. 3694, 67th Cong., 2nd Sess. (1922), for example, provided that station licenses "shall not be transferred, assigned, or in any manner either voluntarily or involuntarily disposed of to any other person, company or corporation without the consent in writing of the Secretary of Commerce."

n11 H.R. 11964, 67th Cong., 2nd Sess., Section 2B (1922); H.R. 13733, 67th Cong., 1st Sess. (1923).

n12 Parallel bills were introduced in the House by Mr. White of Maine, H.R. 5589, 69th Cong., 1st Sess. (1925), which was revised several times, passed the House on March 16, 1926, and was incorporated into the bill passed by the Senate which ultimately became the Radio Act of 1927. For further legislative history, see H. Warner, Radio and Television Law 52 (1948).

During the hearings on S. 1 and S. 1754 before the Senate Committee on Interstate Commerce, n13 it was made clear that the Section prohibiting license transfers without the approval of the Secretary of Commerce was "intended to preclude the concentration of facilities by a single interest." n14 The following colloquy between Senator Couzens, Mr. Davis (Solicitor of the Department of Commerce), and Senator Watson (Chairman of the Committee) establishes this point:

n13 69th Cong., 1st Sess. (1925).

n14 H. Warner, Radio and Television Law 52b, p. 546 (1948).

SEN. COUZENS: "But have you any suggestion as to how a monopoly might be prevented if you continued that policy?"

MR. DAVIS: "Yes sir."

SEN. COUZENS: "What is it?"

MR. DAVIS: "Under the terms of the Dill bill that is pending before you now there is a provision that no license may be transferred... excepting with the approval of the Secretary of Commerce. In other words, there is no absolute right of transfer. So that it would be within the power of the Secretary of Commerce to refuse to grant new licenses or to renew old licenses if purchases were carried out to the extent of constituting a monopoly or single ownership in any particular locality."

[*996] SEN. WATSON: "[Unless] you put into your bill an express inhibition against monopoly, might not some great institution... buy up a number of those [broadcast stations] indirectly and own them if they wanted to own them?"

MR. DAVIS: "The situation is covered... [in] the first place by requiring that all such assignments be subject to the approval of the Secretary of Commerce."

SEN. WATSON: "Yes." n15

n15 Hearings on S. 1 and S. 1754, 69th Cong., 1st Sess., pp. 43-44 (1925).

When the Radio Act of 1927 was passed, n16 Section 12 incorporated the much-discussed limitation on license transfers. Section 12 provided in pertinent part:

n16 44 Stat. 1162, 47 U.S.C. 81-119, Public Law No. 632, 69th Cong., c. 169 (1927).

The station license... shall not be transferred, assigned, or in any manner, either voluntarily or involuntarily, disposed of to any person, firm, company, or corporation without the consent in writing of the licensing authority.

Congressman White of Maine explained the purpose of Section 12 in the opening debate on the 1927 Act:

In existing law there is no restraint upon the right of a licensee to transfer his license. We here deny this right except with the consent of the Secretary of Commerce. Freedom to barter and sell licenses threatens the principle that only those who will render a public service may enjoy a license. Its object is to prevent the concentration of broadcast facilities by a few or by a single interest. Your committee felt this a possibility to be guarded against. n17

n17 69th Cong., 1st Sess., 67th Cong. Rec. 5479 (1926) (emphasis added).

Congressman White's interpretation was subsequently acknowledged as definitive in Pote v. Federal Radio Commission, 62 App. D.C. 303, 304, 67 F. 2d 509, 510, cert. denied, 290 U.S. 680 (1933).

In 1934, a new Communications Act was substituted for the 1927 Radio Commission Act. In its report on S. 2910, n18 the forerunner of the 1934 Communications Act, the Senate Committee on Interstate Commerce announced that Section 12 of the 1927 Act remained unchanged by stating that "Section 310(b) is Section 12 of the Radio Act...." n19 The House also recognized clearly that "Section 310(b) is substantially Section 12 of the Radio Act...." n20

 

n18 73rd Cong., 2nd Sess. (1934).

n19 S. Rep. No. 781, which accompanied S. 3285, 73rd Cong., 2nd Sess. (1934).

n20 See Vide Conference Report No. 1918 to S. 3285, 73rd Cong., 2nd Sess. (1934).

There seems little doubt, therefore, that Section 12 of the 1927 Act and Section 310(b) of the 1934 Act were designed to authorize first the Secretary of Commerce and then the FCC to prevent monopolization of the broadcast media through transfers of control. As the Solicitor of the Department of Commerce, Mr. Davis, stated in 1925, Section 12 was designed to prevent transfers which might constitute "a monopoly or single ownership in an particular locality." n21 Congressman White of Maine concurred in 1926 when he stated that the object of Section 12 was "to prevent the concentration of broadcast facilities by a few or by a single interest." n22 Accordingly, both the FRC and the FCC were empowered and required to bar such transfers whenever the public interest would not be served thereby. The FCC itself has expressly acknowledged this obligation. Over two decades ago, for example, the Commission stated:

n21 See note 15 supra.

n22 See noe 17 supra.

 

Section 310(b) of the Communications Act of 1934... has as its primary objectives (1) the securing of the best qualified persons as broadcast licensees, [*997] (2) the prevention of undue concentrations of radio facilities, and (3) the encouragement of open competition among qualified persons desiring to operate radio facilities.

 

Associated Broadcasters, Inc., 3 P & F Radio Reg. 1826f, 1838 (1948). [Emphasis supplied.]

 

B. The Problems of "Duopoly"

Over the years, the FCC has acted in many ways to control the problems of multiple-station ownership in the same market -- the problem of "duopoly," or control of more than one broadcast outlet in the same service in the same market. In March 1938, the Commission issued its Order No. 37 initiating an investigation into chain broadcasting. n23 On May 2, 1941, the Commission released its famous Report on Chain Broadcasting which, among other things, barred network ownership of "more than one station within a given area...." n24 And during the same general time period, the Commission adopted rules prohibiting one person or entity from owning more than one FM (June 21, 1940), more than one TV (April 30, 1941), or more than one AM (November 23, 1943), in any one market or service area. n25

n23 FCC Order Instituting Chain Broadcasting Investigation, Order No. 37 (March 18, 1938), reprinted in FCC Report on Chain Broadcasting 95-96 (Docket No. 5060) (May 1941).

n24 FCC Report on Chain Broadcasting, supra, note 23 at 69; see Section 3.106 of the "network rules" appended to the 1941 Report.

n25 See generally, Network Broadcasting. H.R. Rep. No. 1297, 85th Cong., 2nd Sess., 554 (1958). At the same time, the Commission imposed limits on the maximum number of stations any entity or person could own: 6 AM's, 6 FM's, and 3 TV's. In 1944 the 3-station limit on TV's was raised to 5. On November 27, 1953, the Commission placed the maximum at 7 AM's, 7 FM's, and 5 TV's. On September 17, 1954, the Commission modified its earlier ruling to permit ownership of 7 TV's, not more than 5 of which could be VHF facilities.

But problems of "duopoly" are not confined to common ownership of broadcast stations in the same service area; they also include -- and the Commission has always viewed them as including -- problems of combined newspaper-broadcast ownership in the same service area. In its recent rulemaking proposal, Multiple Ownership of Standard, FM and TV Broadcast Stations, looking toward expansion of the Commission's duopoly rules to bar newspaper-broadcast ownership, the Commission recalled that "[we] have long been concerned with the particular problem of newspaper-broadcast joint control as an important factor in the overall attempt to secure diversity in the control of broadcast facilities." n26 In that document the Commission stated very clearly that newspaper-broadcast ownership was merely one aspect of the "duopoly" problem, and that the policies supporting our one-to-a-market rules for broadcasting were directly applicable to newspaper-broadcast ownership:

n26 Multiple Ownership of Standard, FM and TV Broadcast Stations, 22 F.C.C. 2d 339, 344 (Docket No. 18110) (1970).

In view of the primary position of the daily newspaper of general circulation and the television broadcast station as sources of news and other information, and discussion of public affairs, particularly with respect to local matters, it is not desirable that these two organs of mass communication should be under the same control in any community. A direct parallel would be the ownership of two television stations in the same community by the person, which the Commission without substantial disagreement from any source, has never permitted. The functions of newspapers and television stations as journalists [*998] are so similar that their joint ownership is, in this respect, essentially the same as the joint ownership of two television stations. n27

n27 Id. at 346 [emphasis supplied].

Because similar policies support the Commission's duopoly rules in broadcast and newspaper-broadcast matters, the history of this Commission's concern with newspaper ownership of broadcast properties is instructive. In 1941, the Commission initiated two separate inquiries n28 into the policy questions involved in combined newspaper-broadcast ownership. Stating that "the question whether the granting of a license is in the 'public interest, convenience, or necessity' where it results in common control of one or more radio stations and one or more newspapers has been presented to the Commission from time to time and has been the subject of debate before the Commission and elsewhere...," n29 the Commission designated, among others, the following issues for investigation:

n28 High Frequency Broadcast Stations (FM), 6 Fed. Reg. 1580 (Order No. 79) (Mar. 22, 1941); Hearing on Joint Association of Newspapers and Broadcast Stations, 6 Fed. Reg. 3302 (Order No. 79-A) (July 8, 1941).

n29 Order No. 79, supra note 28 at 1580.

Whether joint association of newspapers and broadcast stations tends or may tend to...

* * *

2. ... prejudice the free and fair presentation of public issues and information over the air, or to cause editorial bias or distortion, or to inject editorial policy or attitude into the public service rendered by broadcast stations as a medium of public communication.

3. ... restrict or distort the broadcasting of news, or to limit the sources of news to the public, or to affect adversely the relation between news-gathering services and broadcast stations.

4. ... have any effect upon freedom of access to the radio forum, for the discussion of public issues.

5. ... lessen or increase competition among broadcast stations or to result in the monopolization of local broadcast facilities.

* * *

7. ... constitute an undue concentration of control over the principal media for public communication.

8. ... result in the utilization of improved facilities and skilled, experienced personnel for the procuring and dissemination of information and opinion by broadcast stations.

9. ... insure greater economic stability for broadcast stations and to encourage the maximum technological development of radio. n30

n30 Order No. 79-A, supra at 3302. The Commission also asked:

"1. To what extent broadcast stations are at present associated with persons also associated with publication of one or more newspapers, the classification (in terms of power, location, network affiliation, etc.) of broadcast stations so associated, the circumstances surrounding such association, and the tendency toward such association in the future.

* * *

"10. What considerations influence newspaper interests to acquire broadcast stations." Id. at 3302.

After summarizing the evidence received in hearings and forwarding it to committees of the Senate and the House, the Commission terminated its 1941 newspaper-broadcasting cross-ownership inquiry. n31 Citing the "grave legal and policy questions involved" in the area, the Commission acknowledged the "serious [problems]" involved in " [*999] monopoly of the avenues of communicating fact and opinion to the public...," supported the "general proposition that diversification of control of such media is desirable...," and stated its "desire to encourage the maximum number of qualified persons to enter the filed of mass communications...." n32 To further this end, the Commission promised it would "inquire into and in its decisions give expression to 'public interest' considerations... [during] the processing of individual applications for licenses...." n33 As this Commission has recently stated, we decided in 1944 that we would "treat the question [of newspaper-broadcast cross-ownership] on a case-by-case basis...." n34

 

n31 Newspaper Ownership of Radio Stations, Notice of Dismissal of Proceedings, 9 Fed. Reg. 702 (Jan. 18, 1944).

n32 Id. at 702-03.

n33 Notice of Dismissal, supra note 31 at 703 (emphasis supplied).

n34 Multiple Ownership of Standard, AM and TV Broadcast Stations, 22 F.C.C. 2d 339, 344 n. 5 (1970).

 

C. Policies Underlying the "Duopoly" Rules

Commission policies underlying its duopoly rules and Congressional policies supporting Section 310(b) of the 1934 Communications Act mesh together. Over the years the Commission has developed rules and policies designed to prevent an excessive concentration of power -- ideological, economic, and political -- over the media of communication. And Congress has provided it with the tools to prevent the evasion of these policies through transfers of broadcast properties into fewer and fewer hands. The following are some of the primary policies that supports such a view.

(1) Diversification of Views. This Commission has time and again reiterated the proposition fundamental to our society that "the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public." n35 Yet equally fundamental is the proposition that diversity of views seems necessarily linked to diversity of ownership over the media through which those ideas are disseminated. n36 This concept was eloquently stated by Judge Learned Hand when he rejected the claim of national news service that the First Amendment protected it from the scope of the antitrust laws. Quite the contrary, Judge Hand remarked, the aims of the First Amendment and the antitrust laws -- at least with respect to the mass media -- may be identical:

n35 Associated Press v. United States, 326 U.S. 1, 20 (1945) (emphasis supplied), quoted in, e.g., Multiple Ownership of Standard, FM and Television Stations, 22 F.C.C. 2d 306, 310 (Docket No. 18110) (1970).

n36 I have developed this view in greater detail in Comparative Hearings on Renewal Applicants, 24 F.C.C. 2d 383, 386 (1970) (reconsideration) (dissenting opinion).

[The newspaper] industry serves one of the most vital of all general interests: the dissemination of news from as many different sources, and with as many different facets and colors as is possible. That interest is clesely akin to, if indeed it is not the same as, the interest protected by the First Amendment; it presupposes that right conclusions are more likely to be gathered out of a multitude of tongues, than through any kind of authoritative selection. n37

n37 United States v. Associated Press, 52 F. Supp. 362, 372 (S.D.N.Y. 1943), aff'd, 326 U.S. 1 (1945).

 

What this may mean is that the antitrust laws -- even if never enacted by Congress -- would be required by any found in the First Amendment, so far as it applies to ownership of the media. Indeed, upon a subsequent appeal from Judge Hand in the same case, the Supreme [*1000] Court affirmed with the observation that "[the] First Amendment, far from providing an argument against application of the Sherman Act,... provides powerful reasons to the contrary." n38 The Commission has recognized this interrelation between diversity of ownership and diversity of views on many occasions:

n38 Associated Press v. United States, 326 U.S. 1, 20 (1945). See Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 390 (1969).

Simply stated, the fundamental purpose of... the multiple ownership rules is to promote diversification of ownership in order to maximize diversification of program and service viewpoints... n39

n39 Amendment of Multiple Ownership Rules, 18 F.C.C. 288, 291-92 (1953).

 

It stands to reason, therefore, that the combined ownership of the largest television station and newspaper in any large community should, at least as a prudent preliminary presumption, be assumed to lessen diversity of viewpoints -- or at least forever bar the possible emergence of two owners with sharply contrasting viewpoints. This at least seemed a major fear when the Commission first investigated joint newspaper-broadcast ownership problems in 1941. n40

n40 See Hearing on Joint Association of Newspapers and Broadcast Stations, 6 Fed. Reg. 3302 (Order No. 79-A) (July 8, 1941). Of ten issues specified for inquiry, issues 2, 3, and 4 expressed the concern that the news policies of either the newspaper or broadcast station might overwhelm the policies of its media partner. See text accompanying note 30 supra.

If control over the media in any one market is placed in a few hands, then fewer and less diverse views will emerge than if ownership is diversified and rests with many competing owners. The ideal structure for media ownership may be a limit of one media outlet to a person in each market, for any deviation from this standard may result in some loss of diversity to the public. The only question is whether a free society can afford or should tolerate less than optimum diversity. There may be countervailing factors to maximum diversity -- such as the programming benefits that may flow from large multi-media owners. But we should at least start with the presumption that maximum diversity is our goal, and permit exceptions only upon most persuasive evidence.

(2) Dispersion of Political Power. In modern societies, political power is increasingly measured in terms of access to the mass media. Through a faucet-like control over the information conveyed to the people, the media influence and control legislators, candidates, and political ideologies from the highest to the lowest levels of national and local government. The prevention of excessive concentrations of political power in the hands of a few individuals, therefore, is an important policy against excessive media concentrations.

(3) Local Ownership of the Media. When one person or business entity owns media outlets in numerous different communities, he necessarily becomes an "absentee landlord" in all but a few localities, thus subverting the concept of local ownership of the media thought to be worthwhile by the Congress and the FCC. The Supreme Court has acknowledged that "[fairness] to communities is furthered by a recognition of local needs for a community radio mouthpiece." n41

n41 FCC v. Allentown Broadcasting Corp., 349 U.S. 358, 363 (1955).

This implies familiarity with local culture, social, and economic conditions, the peculiar needs of local civic, social, and business groups, and the various available participants and entertainment talent in the Community. It has been [*1001] assumed that applicants firmly rooted in community background and interest and prominently identified with local business and civic life are in a position to render a sensitive response to community demands. It is further assumed that an applicant who is well established in the community to be served will be in a better position to provide a well-rounded and properly balanced program service than a competing applicant who is less closely identified with the community or who, while identified with the community, divides his attention, time, and resources among several television markets rather than devoting his full resources to the particular community for which the license is to be granted. n42

n42 Committee on Interstate and Foreign Commerce, Network Broadcasting 556 (H.R. No. 1297, 85th Cong., 2d Sess. 1958) (footnotes omitted).

The Commission itself has been so concerned with local ownership that it has based its entire broadcast allocation structure, with 7,500 local broadcast outlets, upon the desire for local service. Because local ownership produces closer supervision over the everyday operations of the station, and creates closer relationships with audiences, the FCC believes that integration of management and ownership will result in better media performance. Yet every multiple owner with media outlets located in separated markets is an absentee owner. Every time an application for a transfer that will increase concentration is filed, therefore, the Commission should carefully balance the loss in local service against whatever public gains the transfer will bring.

(4) Prevention of Anti-Competitive Practices, Media Distortion, and Economic Concentration. Excessive concentration of control over the media substantially increases the possibility for anti-competitive practices by media owners and operators. For example, a media owner with two separate media outlets in the same market might use the monopoly power of one outlet (e.g., the city's only major newspaper) to destroy competition against the other outlet. The owner of a broadcast station might give preferential ("tie-in") advertising rates to those people who also advertised in his local newspaper. n43 Similarly, multiple ownership and conglomerate ownership of the media creates a potential for distortion of media content by the corporate owner to benefit his non-broadcast business interests.

n43 See Complaint of Daily Herald-Telephone and Sunday Herald-Times, Bloomington, Indiana, F.C.C. 2d (Feb. 18, 1970). See also Renewal Applications of Newhouse Broadcasting Corp., FCC Public Notice 42339, Dec. 19, 1969; Thoroughbred Broadcasters, Inc., 11 F.C.C. 2d 939 (1968).

If anti-competitive practices occur more often in a concentrated market than otherwise -- as the evidence suggests -- than we cannot afford to act only when we learn of those few abuses that do come to light. Abuses are always hard to show. And we have no institution in our society that regularly examines the functioning of the mass media to determine whether and when they have occurred. For these reasons, limitations on the concentration of control present in the media serve a valuable and necessary prophylactic function. They prevent the monopolist from attaining a position from which he can exercise his power in anti-competitive or anti-social ways.

A related problem is the economic damage caused by a concentrated market without substantial competition. Concentrated media ownership involves the same economic problems as found in other monopolistic or oligopolistic industries: higher costs, decreased efficiency, lack of [*1002] innovation, resource misallocation, and so forth. Innovation is generally stifled in most concentrated industries; and this loss is even more tragic in those media industries that feed information to our people. We must have an open, competitive market to offer our most creative people the diversity of opportunity in which to exercise their talents.

(5) Prevention of Excessive Government Regulation. A final policy opposing concentration of mass media control is that full competition in an industry is an argument for less governmental supervision over the industry's day-to-day operations. A competitive system is, to some extent, a self-policing one that makes expensive, continual -- and potentially dangerous -- governmental surveillance less necessary.

 

D. Summary: The Legal Guidelines for Transfers of Control

Diversification of media control is perhaps the strongest policy built into our scheme of broadcast regulation. The Commission itself had described it as a "factor of primary significance," adding:

Diversification of control is a public good in a free society, and is additionally desirable where a government licensing system limits access by the public to the use of radio and television facilities.

Policy Statement on Comparative Broadcast Hearings, 1 F.C.C. 2d 393, 394 (1965). The principal justifications for this policy are fivefold: that diversity of views, essential to a free and democratic society, will more likely flow from multiple instead of monolithic ownership of media outlets, and that diversification will prevent accumulations of excessive political power, permit greater local ownership, bar the adverse economic consequences of monopoly ownership, and reduce the need for government regulation.

In pursuit of its diversification goal, the Commission has adopted a series of "duopoly" rules which bar ownership of more than one AM, FM, or TV station by a single owner in the same market, and has recently announced a prospective ban on acquisitions giving any owner more than a single broadcast facility in any one market. See Multiple Ownership of Standard, FM and TV Broadcast Stations, 22 F.C.C. 2d 306 (Docket No. 18110) (1970). Further, although the Commission exercises no direct supervisory control over the sale and acquisition of newspaper properties, it has "long been concerned with the particular problem of newspaper-broadcast joint control as an important factor in the overall attempt to secure diversity in the control of broadcast facilities." Multiple Ownership of Standard, FM and TV Broadcast Stations, 22 F.C.C. 2d 339, 344 (Docket No. 18110) (1970); see Hearings on Joint Association of Newspapers and Broadcast Stations, 6 Fed. Reg. 3302 [Order No. 79-A] (July 8, 1941); Newspaper Ownership of Radio Stations, Notice of Dismissal of Proceedings, 9 Fed. Reg. 702 (Jan. 18, 1944).

The Commission must frequently exercise its supervisory power during Section 310(b) transfers -- when, for example, a newspaper owner seeks to acquire a broadcast station in the same market, or some entity (such as the Times Mirror Co.) seeks to acquire both a [*1003] newspaper and one or more broadcast outlets in the same market. n44 At that point, the Commission must determine how joint ownership of a newspaper will affect the operation of broadcast facilities in the public interest, with reference to the policy guidelines derived from the goal of diversification.

n44 The acquisition of a newspaper by a broadcast licensee is less likely to come to the Commission's official attention, however, because Section 310(b) covers only the transfer of broadcast station licenses. The first opportunity to consider the implications of a newspaper purchase would come at license renewal -- by which time the Commission is usually reluctant to disturb the structural status quo.

Prior to 1934, numerous Congressmen expressed their concern that an unchecked power to buy and sell broadcast properties might permit the growth of dangerously large media monopolies. In Section 310(b) of the 1934 Communications Act, therefore, Congress required the Commission to reject all transfer applications when it could not find, in an affirmative manner, that the "public interest, convenience, and necessity" [emphasis supplied] would be served thereby. Although Section 310(b) does not specifically refer to concentration problems, the available legislative history demonstrates that Congressional concern over undue concentration of control was a primary motivating factor in its passage.

Congress did not provide the Commission with guidelines to determine when concentration was "excessive." However, Congress did emphasize in Section 310(b) the nature of the finding it expected the Commission to make. According to Section 310(b), it is not sufficient for the Commission merely to hold that a transfer "may not hurt" the or that there is "no clear and convincing evidence" of a potentially adverse impact. Rather, the Commission must find that the public will be benefited -- that is, positively served -- by the transfer, and that all the values built into our broadcasting system will be promoted. In a word, the transfer must satisfy public "necessity."

Accordingly, it seems clear that the history, purpose and importance of Section 310(b) requires this Commission to withhold its approval over any transfer of broadcast control until the applicants have successfully demonstrated that the transfer is, of "necessity," required by the public interest. In other words, transfers which would give one licensee, in any one market, more than one AM, or one FM, or one TV, or one daily newspaper, must initially be presumed per se to violate the Commission's diversity policies. In such cases, applicants would be given Commission sanction for transfers only by demonstrating either that the fullest potential range of program diversity would not be damaged by the transfer, or that there are countervailing considerations which outweigh a simple diversification standard. Applicants might argue, for example, that without joint ownership of an AM-FM combination in a small community, continued operation of one or both facilities would be impossible. Or, for example, an applicant might contend that a joint newspaper-FM operation would improve the quality of the FM service, without substantially impairing the diversity of views expressed over that facility. But the important point is that these contentions must be proven, with specific economic and other relevant and persuasive data, and the strength of this showing [*1004] must be "compelling." Mere unsupported allegations of countervailing considerations should be rejected out of hand.

Many of the problem areas involved in newspaper-broadcast cross-ownership transfers were articulated by the Commission almost 30 years ago, see Hearing on Joint Association of Newspaper and Broadcast Stations, 6 Fed. Reg. 3302 [Order No. 79-A] (July 8, 1941); see also, Wichita-Hutchinson Co., Inc. (KTVH-TV), 19 F.C.C. 2d 433, 445-46 (1969), yet they remain valid today. Drawing on those concerns, I would require all transfer applicants, in cases where transfers would result in less than maximum diversity of ownership or control, to prove conclusively the following:

(1) That newspaper editorial bias or policy will not prejudice or distort the free and fair presentation of public issues and information over the air;

(2) That news broadcasts will not be restricted, or news sources limited, to preserve the newspaper's dominant position as the major purveyor of national and local news, and community affairs and information;

(3) That newspaper ownership will not lessen economic competition among broadcast stations, or between newspapers and broadcast stations, or result in the monopolization of local broadcast facilities;

(4) That newspaper ownership will not delay or curtail the technological improvement of broadcast facilities;

(5) That newspaper ownership will not restrict or discourage the entry of skilled and experienced personnel into broadcasting, or siphon off creative or talented personnel into the print medium;

(6) That newspaper ownership will not drain off capital and profits from jointly-owned broadcasting properties for non-broadcasting purposes;

(7) That newspaper ownership will not limit "freedom of access" by groups and individuals for the self-expression of views on public and controversial issues.

All these factors are potential problems inherent in combined newspaper-broadcast ownership; all work against the public interest; and all must be dispelled before media transfers should be approved.

I have excluded from this list the argument, raised by some applicants, that transfers should nevertheless be approved whenever they decrease concentrations of media control -- even though the resulting media structure is far from perfect, and still concentrates substantial control in a few hands. The Commission has considered, and rejected, this argument before. In Wichita-Hutchinson Co., Inc. (KTVH-TV), 19 F.C.C. 2d 433 (1969), the transfer of KTVH-TV from Cowles to Gaylord interests was designated for hearing, not to determine whether the transfer would decrease regional concentration of control, but whether it would "result in" an undue concentration of control. Id. at 445. On reconsideration, see Wichita-Hutchinson Co., Inc. (KTVH-TV), 20 F.C.C. 2d 951 (1969), we clarified this point, finding ourselves "unable to conclude that no undue regional concentration of control would result...," 20 F.C.C. 2d at 952 [emphasis supplied], and we found substantial support for the conclusion that the transfer "would result in an unwarranted or undue [not decreased or diminished] regional [*1005] concentration of control." 20 F.C.C. 2d at 953 [emphasis supplied].

This position is required by the 1934 Act. The Commission cannot approve transfers, and therefore create ownership situations, which violate the "public interest." Proposed transfers violative of the Commission's diversity policies cannot be saved by the argument that the present ownership pattern is worse. This may mean, of course, that a highly concentrated and undesirable ownership pattern may continue for some time into the future. But there are several reasons why this is unlikely, or possibly preferable to approval of an undesirable transfer.

First, approval of an excessive concentration transfer may establish an ownership pattern which will last for decades. Denial of such a transfer application does not mean the property cannot be sold; it means merely that the seller must seek out another buyer -- one whose ownership patterns do not violate the Commission's diversity policies. There may, of course, be situations where it is impossible to find such a purchaser willing to offer a reasonable price for the properties. Only then could the Commission weigh this difficulty, plus the potential inequities to the present owner, against countervailing anti-diversity public interest considerations.

Second, a licensee who finds it desirable or necessary to find one purchaser will no doubt find it equally necessary or desirable to find another. The economic forces that induced the licensee to attempt the sale of his facility will likely persist, making renewed sale efforts probable. For this reason, a denial of the first transfer application will not normally preserve the status quo; it will simply delay the transfer until the transferor can find a more suitable purchaser.

Third, the argument that another purchaser cannot be found often rests on the unspoken assumption that a licensee should not have to lower his selling price. Yet the FCC is not obliged to guarantee the transferor a profit on his sale. By refusing to approve sales to unduly concentrated purchasers, the FCC does not necessarily block the sale, but may oblige the licensee to settle for a less-than-maximum price.

Fourth, a transfer is often a particularly appropriate time for the Commission to enforce its duopoly standards in the broadcasting field. Over the years, the Commission has permitted numerous concentrations of control to grow in private hands. There are areas, for example, where one person or corporation owns virtually all the radio, television and newspaper facilities in a single community. No doubt some of this has happened without direct Commission involvement -- as where competing media go bankrupt, leaving one highly concentrated licensee in control of an area; or where a licensee purchases a newspaper in a transaction not directly subject to FCC control. There have also been instances where the Commission has approved certain monopolistic acquisitions for some overriding purpose -- e.g., to bring new services into an area that was financially too small to support multiple owners. And, of course, the prevailing standards of permissible concentration have no doubt changed over the years, and the Commission today might not approve transfers which it thought permissible 15 or 20 years ago.

[*1006] On the other hand, restructuring the broadcast industry at license renewal time -- although sometimes necessary -- may subject licensees to substantial hardship. For one thing, denial of renewal abruptly takes from the licensee all salable assets, making it impossible to recover costs and investments. (Of course, there are many ways to overcome this problem -- such as tax benefits, subsidies, or reimbursement by the new licensee.) Denial of license renewal may also interrupt service until new applications can be filed and approved. In sum, there may be substantial inequities, both to the incumbent licensee and the public, when a license is removed at renewal time due to undue concentrations of control in which the Commission has directly or indirectly acquiesced.

Yet these inequities do not exist when the Commission refuses to permit a licensee to sell off his broadcast interests (normally at substantial profits) to an excessively concentrated purchaser. There are important differences between denials of renewal applications and of transfer applications. First, the renewal applicant abruptly loses his control over a broadcast frequency without compensation for his investment (although systems of compensation could easily be devised). But the transfer applicant has been deprived of nothing. He has been told only that he must find another purchaser -- one who does not already have other media interests in the same market or region. Second, because license renewal periods occur automatically every three years, the renewal applicant has no control over the timing of Commission action. Yet the transfer applicant has complete control over the timing of his sale -- and may be able, therefore, to choose the most convenient time for tax, economic or other business reasons. Denial of license renewals, therefore, is "capital punishment" for a licensee; but denial of transfer applications is only a temporary stay -- during which the transfer applicant must endure the comparatively minor inconvenience of having to find another purchaser.

In sum, I would adopt the rebuttable presumption that any transfer which would place more than one AM, or one FM, or one TV, or one newspaper, in any single community, in the hands of a single broadcast licensee, violates the "public interest" in and "necessity" for complete diversity of ownership and control. The transfer applicant should be given the opportunity to overcome this presumption. But the must do it only by proving that none of the specific dangers of concentration would exist in his case, and/or that countervailing considerations (e.g., the inability to find another purchaser, access to greater programming funds, etc.) would militate in his favor. Without such a " compelling" showing, I would deny all such transfers.

 

III. The Present Transfers

 

There are two transfers before us: the transfer of KRLD-TV and the Dallas Times Herald to the Times Mirror Company, publisher of the Los Angeles Times and Newsday; and the transfers to KRLD-AM and KRLD-FM to KRLD Corp., apparently a newly formed local Dallas corporation. According to the principles outlined above and the totally inadequate showings made by the applicants, I would deny both transfer applications.

[*1007] A. KRLD-TV and the Dallas Times Herald

On their face, the joint transfers of KRLD-TV and the Dallas Times Herald violates all the policies behind the Commission's duopoly rules, as summarized in Section II-C above. The transfer fails to promote the greatest possible diversification of ownership and control; it increases the danger that a combined newspaper-TV operation will exercise substantial political power; it bars local ownership of both the TV station and the newspaper; it increases the potential for anti-competitive practices; and it should require close governmental antitrust and other supervision.

Have the applicants, then, made any persuasive showing to overcome the presumption that this concentration of media control is per se not in the public's best interests? The answer is: No! We have been given no assurances (other than conclusory, unsupported and self-serving assertions) that the newspaper's editorial persuasion will not influence the TV station's; that news sources will not be restricted; that economic competition between the two will not be lessened; that technological innovations will not be diminished; that capital will not be drained off from the television station to support newspaper activities; that talented personnel will not be lured away to newspaper employment; or that freedom of access by groups and individuals will not be decreased. In short, the applicants have merely asked for Commission approval and gotten it. The Commission has simply abdicated its power and responsibility given by Congress in Section 310(b) of the 1934 Communications Act.

The majority has argued that the transfer will reduce media concentration in the Dallas-Ft. Worth area, but as we have seen above that is an improper consideration. The question is not whether concentration will be decreased, but whether any reasons exist for not completely maximizing diversity of ownership and control in that market -- by requiring the assignor Times Herald Printing Company to find separate buyers for the AM, the FM, the TV, and the newspaper. Neither the applicants nor the majority even address this problem.

The majority also argues that the area is already served by a "plethora of media," and that there is no potential for undue influence over views in the area by the TV-newspaper combination. This ignores the fact that the TV and newspaper in question are the most important and powerful media in their respective categories in the Dallas-Ft. Worth area. It also ignores the fact that both the TV and the newspaper will no longer be locally owned. And it fails to indicate why completely diversified ownership would not be preferable -- in light of the potential problems outlined in Section II-D above. Indeed, the Commission's belief that no problems will be raised is based entirely on sheer speculation. The fact that we have received not a shred of evidence on this point only highlights the Commission's Beagle-like eagerness always to please their licensee-clients by assuming the best of them. What standard, after all, has the majority used to judge the accumulation of media power given to the Times Mirror Company? None. The majority has referred to no standard because it has never taken the trouble to develop one.

[*1008] In addition to numerous illogical leaps in the majority's opinion, there are a number of additional national and local problems with this transfer. First, the Times Mirror Company will clearly become an even more significant voice in the political and economic life of our nation. In my view, when applicants propose acquisitions which would give them a significant accumulation of national media power (here, the major Los Angeles newspaper, the major TV station and newspaper in the Dallas-Ft. Worth area, Newsday in Long Island, etc.), the Commission should require the parties to show specific public benefits which will flow from the establishment of such national media power blocs. Absent such a showing, the applications should be denied. Hearings and other fact finding procedures should be used when there is any question about the public benefits from certain media combinations. It should not be enough to make simple conclusory statements that no "undue concentration" exists. Yet that is all the majority has done in this case. No public benefits have been found by the majority to offset the national media power of Times Mirror.

Second, it seems clear that there are local concentration problems as well. If the Times Mirror Company were acquiring both the newspaper and the television station in separate transactions from different corporations, compare United States v. Gannett Co., 1968 CCH Trade Cases 72,644 (N.D. Ill. 1968), or if the Dallas newspaper was acquiring the Dallas television station (or vice versa), compare Beaumont Television Corp., 17 F.C.C. 2d 577, 16 P & F Radio Reg. 2d 93 (1969), significant antitrust problems under Section 7 of the Clayton Act would be raised. These concerns should highlight the problems in approving this transfer -- where Times Mirror is allowed to do what it might not be able to do were it buying the newspaper and television station from separate corporations.

Third, the majority's action is entirely inconsistent with the Commission's policies in local market ownership. Thus, for example, if the Times Mirror Company were to acquire a TV-AM-FM combination in a single market, it would be required to spin off the AM and FM by the Commission's one-to-a-market rules. See Multiple Ownership of Standard, FM and TV Broadcast Stations, 22 F.C.C. 2d 306 (Docket No. 18110) (1970). But apparently it can acquire a TV-newspaper combination and the Commission takes no action except approval. In terms of the goals of diversification, this makes no sense at all. The amount of deconcentration which is achieved by splitting off the AM-FM from the TV-newspaper combination, a limited benefit, is illustrated by the fact that the value of the AM-FM is roughly one-tenth of the total TV-newspaper-AM-FM package. The Commission recently said in its one-to-a-market rulemaking, "In view of the primary position of the daily newspaper of general circulation and the television broadcast station as sources of news and other information, and discussion of public affairs, particularly with respect to local matters, it is not desirable that these two organs of mass communication should be under the same control in any community." Id. at 346. In view of this recent statement, it is difficult to see how we can approve the new ownership of a newspaper-TV combination absent strong [*1009] countervailing public benefits which outweigh continued existence of a situation the Commission has so recently described as "undesirable."

Finally, the Times Mirror Company is controlled by the Chandler family with much of its stock owned by the Chandis Securities Company. The second largest holder of Times Mirror stock is the Mormon Church, whose media holdings are well-known. See John Poole Broadcasting Co., Inc., 16 F.C.C. 2d 458, 460 (1969). The Mormon Church's 600,000 shares of Times Mirror represent slightly more than a 4% ownership interest. I believe the majority should explain how the public interest is served by this cross-ownership situation, especially in view of the greatly increased holdings Times Mirror has now acquired.

 

B. KRLD-AM and KRLD-FM

According to the majority (at par. 4), KRLD Corp. will receive both KRLD-AM and KRLD-FM, "subject to our new multiple ownership rules." Elsewhere the majority states (at par. 18) that KRLD-AM will "eventually" be separated from KRLD-FM. When? In actual fact, the majority has sanctioned the package transfer of KRLD-AM-FM, in violation of our newly adopted one-to-a-market rules, without attempting to justify this rule waiver, or even specify a deadline by which time the division of the two facilities must be completed. Even the best of Commission rules are worthless where the Commission lacks the will to enforce them.

The sale price for KRLD-AM and KRLD-FM was $6,750,000. This substantial amount should dispel any question whether KRLD-AM and KRLD-FM are so financially insecure that they can only be operated in tandem. No party during the transfer proceedings has claimed that the AM-FM combination cannot be dissolved. Why then is the majority so eager to do the applicant's bidding?

KRLD-FM duplicates the programming of KRLD-AM 45.7% of the time. This means that the Dallas-Ft. Worth area listeners receive service, in effect, from only one-and-a-half stations. Not only are listeners deprived of the programming diversity that often flows from separate ownership and management, but they even lose the benefit of full and separate programming schedules from two commonly-owned stations.

The Commission has been given no justification for even a temporary continuation of joint KRLD-AM-FM operation and ownership. I would have denied the transfer application until the licensee had obtained separate purchasers for KRLD-AM and KRLD-FM. The majority's reluctance to specify a deadline by which KRLD Corp. must divest itself of either the AM or the FM suggests a "benign neglect" toward Commission rules. One wonders how seriously our newly adopted one-to-a-market rules will be enforced given the majority's cavalier attitude toward "law-n-order" in its own rules. n45

n45 KRLD Corp. has now applied for waiver of the one-to-a-market rules. Files Nos. BAL-6856 and BALH-1316, received Aug. 10, 1970, filing their request shortly after the majority's action. No doubt they intended this ploy all along. Perhaps the Commission's staff knew of this plan before our decision, and were therefore naturally reluctant to push for an embarrasing divestiture deadline for either the AM or the FM. In any event, the Commission's resolve in enforcing its rules will soon be tested when this application comes before us again.

[*1010] Conclusion

When all is said and done, the Commission has permitted the applicants to transfer four of the most powerful media voices in the Dallas-Ft. Worth market into the hands of two business entities. Instead of separating the most successful newspaper and television station in the area, placing them under separate ownership, the Commission has sanctioned the sale of the Dallas Times Herald and KRLD-TV to the multiple-media, out-of-state, non-resident owner of the Los Angeles Times and Newsday.

My principal beef is not with the Los Angeles Times, but with my colleagues. The Times has proven itself to be a professional and responsible paper. I know nothing of its operations from my own personal knowledge that raise questions about its ability to run the Dallas newspaper and television station -- although one cannot help but wonder why a respectable newspaper would want to suffer the inevitable loss of good will and prestige that will come from associating itself with the conventional, commercial television business. Take a look at what the majority has not done.

The majority has made no pretense that it has guarded the public interest in this transfer. The majority does not even hide the fact that it has no standards or guidelines for transfers of TV-newspaper combinations -- other than automatic approval of whatever is asked. Although the transfer, on its face, violates all the important Commission and Congressional policies against cross-ownership of important media, the Commission has not asked the parties even to explain what purported benefits of the transaction will accrue to the public. n46 Had they been asked they might have been able to answer. Perhaps my colleagues felt this would prove too embarrassing -- to the applicants, as well as the Commission. The same deficiencies apply to the KRLD-AM-FM transfer.

n46 According to the Washington Post, May 13, 1970, p. A-2, col. 1, Mr. Bill Moyers, former publisher of Newsday, the largest suburban paper in the country and winner of two recent Pulitzer prizes, resigned as the Times Mirror Company acquired his paper. He stated to Newsday employees: "To have published a newspaper beholden to no party, ideology or interest group is a rare and rewarding experience, and I will not soon forget... it." What is the present status of freedom at Newsday? What will it be at the Dallas Times Herald? No doubt we shall never know.

I regret that I see no end to this continual abdication of Commission responsibilities and duties. I can only register my protest and my dissent.

 


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